EnLink Plans Next $1 Billion in Capital Spending as Permian Basin, Gulf Coast Projects Boom in Third-Quarter 2014

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Researched by Industrial Info Resources (Sugar Land, Texas)--The EnLink Midstream companies, EnLink Midstream Partners LP (NYSE:ENLK) and EnLink Midstream LLC (NYSE:ENLC), completed $1 billion in growth projects and prepared for further expansions in the Permian Basin and Utica Shale, and along the Gulf Coast, eight months after they were formed through the merger of Crosstex Energy and the U.S. midstream assets of Devon Energy (NYSE:DVN) (Oklahoma City, Oklahoma). Net income was reported to be $85.7 million for the quarter, including $41.7 million of income from non-controlling interests.

Industrial Info is tracking more than $1.5 billion in active projects involving EnLink, which also has assets in the Eagle Ford Shale, the Haynesville Shale, the Barnett Shale, the Cana and Arkoma Woodford, and the Marcellus Shale. Among the projects tracked are two additions at natural gas liquids (NGL) fractionation facilities in Louisiana: the $300 million addition of a 100,000-barrel-per-day (BBL/d) NGL fractionator at a processing plant in Plaquemine, and the $125 million expansion of a plant in Geismar.

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The Plaquemine project, which is expected to kick off in the second quarter of 2015, is planned to bring the site's total fractionation capacity to 300,000 BBL/d of NGL purity-grade propane, ethane and butane. The Geismar project, which is expected to kick off in the third quarter of 2015, is designed to more than double NGL fractionation capacity via a 30,000-BBL/d addition that will produce iso-butane, butane, natural gasoline and heavier C5+ chain processing. Hargrove Engineers and Constructors (Mobile, Alabama) will perform engineering, procurement and construction services for the Geismar project.

Total revenues were reported to be $851.4 million, of which $206.3 million came from affiliates. More than half of the company's operating margin came from its Texas segment, which includes natural gas gathering, processing, transmission and fractionation operations in northern and western Texas. Among the roughly $1 billion in growth projects that were completed during the quarter was a substantial part of the Bearkat expansion project in West Texas, which involves the construction of a cryogenic processing plant to process up to 60 million standard cubic feet per day of natural gas from the Permian Basin.

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Capital expenditures on maintenance totaled $5.6 million during the third quarter. Earlier this week, EnLink announced that it had completed its acquisition of several Gulf Coast natural gas pipeline assets from Chevron (NYSE:CVX) (San Ramon, California). According to a November 3 press release from EnLink, these assets "include about 1,400 miles of natural gas pipelines in three systems spanning from Beaumont, Texas, to the Mississippi River corridor; about 11 billion cubic feet of working natural gas storage capacity in three caverns in southern Louisiana; and ownership and management of the title tracking services offered at the Henry Hub, the delivery location for NYMEX natural gas futures contracts."

EnLink executives hope to double the size of their company by 2017, and already have announced upward of $1 billion in new capital projects, including a $200 million drop down from EnLink Midstream LLC, the general partner, to EnLink Midstream Partners LP; a $235 million strategic acquisition in southern Louisiana; a $200 million expansion project of the West Texas position; and a $50 million expansion of the Cajun-Sibon project, which will serve Marathon Oil (NYSE:MRO) (Houston, Texas).

"As part of our expansion projects in the Permian Basin, we announced a new, 120 million-cubic-feet-per-day natural gas processing plant; multiple low-pressure gathering pipelines; and a new, 23-mile, high-pressure pipeline," said Barry Davis, the president and chief executive officer of EnLink, in a conference call. "This project is supported by a long-term, fee-based agreement with Devon to provide gathering and processing services for 18,000 acres under development in Martin County, one of the hottest spots in all of the Permian Basin. The entire expansion project is expected to cost over $200 million, roughly doubling our investment in the Permian to over $400 million.

"We're also excited about the additional opportunities in other areas where Devon is growing their production, including the Eagle Ford [Shale], Oklahoma, and the Delaware Basin, as well as possible new basins that Devon may develop in the future."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.